J.C. Penney has been quick to take action following its leadership change last week, announcing Monday that it would draw on its credit facility to fund upcoming improvements.
The retailer is planning to draw $850 million out of its $1.85 billion of committed revolving credit facility in order to fund various capital expenditures needed for a turnaround. Among those expenditures will be the replenishment of inventory once JCP’s newly renovated home departments launch next month.
"Earlier this year, we increased our revolving credit facility in anticipation of operating, working capital and capital expenditure needs, especially during the first half of the year,” says Ken Hannah, chief financial officer, JCP. “As we near completion of the home department transformation in over 500 stores, we have been undertaking and will continue to experience a significant inventory build and increase in capital expenditures.”
The move is the latest in a series of recent strategic shifts that began last week when current chief executive officer Ron Johnson was replaced after 18 months in the position. Former JCP CEO Myron E. Ullman has once again taken the helm of the retailer.
Even before Johnson left JCP, the department store chain had already begun to backtrack on many of Johnson’s policies, most recently with the re-introduction of its coupon program in January.
The rollout of the new JCP home departments has been overshadowed by a separate but equally intense drama taking place in the courts, with Macy’s claiming that JCP’s line of Martha Stewart home products violate its own exclusive contract with Stewart.